Reflecting on ways to bootstrap a startup

If you are a first time startup founder, or have done a few projects but are still working either full-time or freelancing part-time, you are likely to struggle to find investment for your startup idea. For this reason, you will probably to need to bootstrap your idea. This has been my experience, and with what I know now I would have done things differently.

How it all started

Since graduating in June 2009 I’ve had the great opportunity to experience both working as a contract developer and jumping in the deep end of creating startups and all that comes both. In fact, I’ve kind of been juggling paid work and startups for around two years now. I want to share some of the experiences I’ve had with the various ways I’ve chosen to handle “surviving” whilst trying to get a startup off the ground.

I finished university having worked on a dissertation that felt very much like a startup (a story for another post), and I was definitely ready to jump in at the deep end and do whatever I needed to do in order to work on a startup and make it succeed. So that’s what I did. In order to be able to keep working on the startup, I had to try a few different things:

The first way: on the side

I spent the first 8 months after university working 3 days a week as a web developer and spending most of my other 4 days working on my first real startup. This worked well to a certain extent - the startup was built and launched within 2-3 months, and it got a certain amount of traction throughout that period.

Bootstrapping your startup on the side can be a massive challenge, but there are a number of often overlooked advantages to this method. Read my thoughts.

The second way: work in waves

After 8 months of working on the startup “on the side” and building up a certain amount of funds, my contract work dried up and rather than finding more I decided to use the funds as runway and give the startup a real push by working on it full-time. I see this as a feasible way to bootstrap a startup, and whilst this could be done multiple times whereby you work to build up funds and then have a boost of productivity, I see a number of issues with this way too.

Having tried working in waves, I would not recommend it as a long term strategy. Read my thoughts.

A third way: ramen profitability

There is only so long you can go on working in waves or working on the side. With OnePage, I had tried both of those methods, and I kept the product completely free. I was aiming for the “grow big fast” approach, and I had tried to get onto a few startup accelerator programs and spoken to a few investors without success. I didn’t have enough traction or a good enough track record.

I realised that the only way to be able to work full-time on a startup was to build a product which generated revenue early. I had the option to try and generate revenue from OnePage, or to apply what I’d learned to a new product. I had a small idea in my mind, and I decided I liked the idea of a blank canvas. With Buffer, I was completely focused on hitting “ramen profitability”. I sensed that if I could get there, it would change everything.

"Ramen profitable" is a term which is used a lot in the startup scene, and one you should get acquainted with if you haven’t already. I think Paul Graham does a good job of describing it, and he may have even invented the phrase:

At YC we use the phrase “ramen profitable” to describe the situation where you’re making just enough to pay your living expenses. Once you cross into ramen profitable, everything changes. You may still need investment to make it big, but you don’t need it this month.

We reached ramen profitability a couple of months ago and I can’t emphasise enough the impact it can have. I gradually dropped the number of days of contract development work I was doing as the revenue grew, and now I get to spend all my days on Buffer. We certainly have many new challenges ahead of us, but it is a very nice place to be.

How I would start, if I could go back

I now believe that anyone can reach ramen profitability, as long as there is real focus on the goal. Once you are focused on generating revenue, it is a good idea to consider how the type of idea you choose can affect how easy it is to bootstrap and reach ramen profitability. If I was just starting out now with the knowledge I now have, I would completely focus on reaching ramen profitability, and I would work on the side on a “tool” with paid plans rather than a “social” idea. This is the approach I took with Buffer and it worked surprisingly well.

I feel it is also a much more doable first step than aiming for the million dollar idea from the outset. Avoiding those world-changing thoughts can make you very productive. As Jason Cohen described very succinctly:

Prevailing wisdom is that “small is risky.” It’s just the opposite. When you just need to be Ramen-profitable, you can do so even in a recession.

Are you trying to get a startup off the ground? Are you bootstrapping? I’d love to hear how you are approaching your startup or how you plan to.

Photo by NoHoDamon

Ways to bootstrap a startup: on the side

A short while ago I wrote about one of the ways I think people could bootstrap a startup from zero funds. I called it "working in waves". Of course, there are more ways than one to get a startup off the ground with no funds. Today I want to share with you my thoughts on building a startup “on the side” and I’d love to hear what you think or any experiences you’ve had.

On the side?

One of the issues with working on a startup is that you are very often moving from a world where you are rewarded immediately for your work to a world where the reward is delayed. The problem, therefore, is having funds in order to get by while you build something up.

One way to have enough funds to get by while you build up your startup is to build your startup “on the side”, in other words whilst you are doing other work. I am currently experiencing this first hand and I have realised that doing things in this way also brings about some other benefits, and of course there are a few challenges if you try doing things this way too.

Great reasons to build your startup “on the side”

Constraints make you focus

When you’re doing 40 hours a week of paid work, you really have to make sure that the few hours you spend moving your startup forward that week count. In my experience this is a very good thing. Now that I am working “on the side” I am much more effective per hour than when I had stretches of multiple full days to work on my startup whilst using the “working in waves” method.

Forced patience

Patience is not often a word which is used to describe what is needed in a startup. However, I have come to the realisation that at the early stages of a startup you need to be obsessively working on getting customer feedback. What has worked for me is adjusting something, and then reaching out for more feedback and then analysing the current situation. Working full-time means that without realising it you are forced to wait long enough to get some feedback before you pivot your idea again too soon.

Questioning what’s necessary for version 1

When you have a long runway of full days and weeks to build your startup, it’s easy to think “we need to launch with that” or “it won’t work without this”. When you’re working on your startup full-time, this might add a few weeks onto how quickly you can get your MVP out. Do the same when you’re working “on the side” and it’ll take you months longer. Working “on the side” really forces you to question what needs to be included in that first version.

Challenges when building your startup “on the side”

Potential burnout

In my experience, your todo list for your startup never ends and even when you think up an idea that you think is so small that it can be done in a week, it takes 7 and after you get it out there you have a flood of other thoughts for what to add to it. It’s easy to work long hours and sleep can really suffer. It’s a constant battle.

Am I going too slow?

When you’re working on paid work you’re often thinking about your startup, and you’re often thinking that you need to be working non-stop. Most of the advice out there says we should be. On top of that, let yourself succumb to the myth that you can be killed by your competition and you’re in for a tough ride. In the early days of my latest venture I got around this by making sure I did at least one thing to move my startup forward a little, no matter how small.

What do you think?

I am now happier working on my startup “on the side” than I was when “working in waves”. I certainly don’t doubt the advantages of an accelerator program such as YCombinator but when you’ve made your decision to bootstrap without funding and you don’t yet have a business making you money in a scalable way, I think the best way is to attempt to build up something to ramen profitability as your first venture. That’s what I’m doing, and then maybe after that I will go for the home run.

Do you have an experience of building something on the side, or are you considering doing it? I’d love to hear from you in the comments.

Photo credit: Chris Rimmer